Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: OZ who wrote (7212)	3/10/2000 11:46:00 PM
From: WaveSeeker	Read Replies (1) \| Respond to of 18137

All I can do is marvel at the accumulated wisdom of the past twenty or so postings. I can't think of a better forum to relate one's experiences to the beginning trader. I hope this helps those just starting out because even a terrible trader can develop into a good one - given time, effort, and experience. I found trading to be totally counter-intuitive to my experience as a software engineer. When you're writing software, everything has to be perfect - there is no room for error. Unfortunately I carried this attitude into trading, so always convinced that a trade would ultimately would work out, I would watch intended scalps turn into losing "investments". I quit my software consulting job in late 1995 to take the All-Tech daytrading course, starting with 65K and setting aside 6 months of living expenses. At the time, almost everyone traded AMAT, COMS, and SUNW. Multi-point moves that have since become an everyday occurrence were rare. The name of the game was scalping eighths and quarters; it was not unusual to do twenty to thirty trades just in CSCO. In the first two weeks of February 1996, I lost approximately 15K just trading off the Level II screen. How could this be? I was making 3-4K a day paper trading during the course. It was actually quite simple - I was buying stocks when they were moving "up" on Level II, and selling stocks as they were going down on Level II. Over and over, buying the offer, selling the bid. In the office, I sat next to a guy who would take a trade and if it moved against him, he would do pushups and situps until the position came back to him. This was early '96, the market was running, and my neighbor was making good money. So I decided to use the same strategy, and by early summer, my 50K was back to 70K. At the time, we had 4:1 leverage, so I was loading up small caps and making money. Then in July, there were 2 straight weeks of vicious small-cap selling and of course being fully margined lost over half of my equity in just a few days. See, the problem was that stocks like IMPX never came back, but of course the large caps did. Finally, by the end of the summer, I cashed out with around 30K and went back to work. By early 1997, I built my savings back up to 75K and went back to full-time trading. In the meantime though, I fully immersed myself in technical analysis, studying chart patterns, reading books, and analyzing my past trades. I adopted a strategy of stock screening based on news and volatility, and a combination of day trading and position trading. I really felt that the inflection point for me in terms of experience and capital was at the end of 1997, so approximately two years had elapsed and the account was up to 200K. I think that 200K is the ideal amount with which to start because of 2 reasons: you can have a decent number of positions and adopt a reasonable position size that allows you to swing with the volatility while reducing the commissions impact. Further, there was always the conscious fear that anything less was just not enough, so the mind games were a factor as well. So here we are today, and my observations are these: the market the past 6 months has been as easy a trading environment as it gets. You will hear lots of people saying how they're up hundreds or even thousands of percentage points in a small amount of time. I'm sure many people have heard the expression "don't confuse a bull market with brains". Look at the Nasdaq chart and ask how much of your gains have been talent and how much have been luck. How are you doing on a relative basis? An earlier poster pointed out that the real pros make good money on the long side even on down days - truer words were never said. Yes, you can learn to become a good trader from a lot of hard work, or you just may have the talent. Do I consider myself a great trader? Not at all. Did I develop into a decent one? Sure. From a 4-year "grizzled" trading veteran in the high eights... WS